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Proposal For Fab Units Will Be Taken Up By The Cabinet

Wednesday, September 11, 2013: The proposal for two semi-conductor chip fabrication units (fabs) in India is supposed to come up for approval in the next Cabinet meeting, possibly to be held on Thursday. With a view to boost domestic manufacturing, the government of India had sent proposals to establish fabs in the country nearly two and a half years ago. An empowered committee received as many as 30 application, out of which two fab projects were short-listed with an investment of $4-5 billion each. The committee includes Sam Pitroda, adviser to the Prime Minister, and V Krishnamurthy, chairman of the National Manufacturing Competitiveness Council, and few others.

Jaypee Group is spearheading one of the two project consortium. It has IBM as its technology partner, whereas the other project is led by Hindustan Semiconductor Manufacturing Corporation. Its technology partner is Geneva-based STMicroelectronics.

Earlier, the proposals were stalled due to the Planning Commission. It was averse to providing huge subsidy at a time when India is facing the issue of fiscal deficit.

Previous year, in the month of July, under the Modified Special Incentive Package Scheme (M-SIPS) the Cabinet had approved incentives worth Rs 100 billion (Rs 10,000 crore) for manufacturing electronic products and components.

M-SIPS entail 20 per cent subsidy on capital expenditure for companies, who wish to invest in special economic zone and 20 per cent for those companies, who want to operate outside SEZ. The companies, which will establish fab units are entitled to get incentives under M-SIPS with some additional benefits.

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